RBI’s Press Release on Digital Lending.

On August 10th, RBI issued a press release highlighting the Working Group (WG) recommendations to be followed by Regulated Entities (REs), Digital Lending Applications (DLAs), and Lending Service Providers (LSPs).

The WG was set up by RBI to study the digital lending landscape in India. Based on the results of the study, WG released suggestions that focused on customer protection, technological requirements, and regulatory framework.

Key highlights of the press release
  • Loan disbursals and repayments should be between the borrower’s bank account and the lenders without any third-party pool account involvement.

  • REs must directly pay the fees and charges to LSPs and not charge the borrower

  • Before signing the loan contract, the borrower must be given a Key Fact Statement (KFS)

  • A change in credit limit should be based on the borrower’s prior consent

  • Borrowers can exit digital loans during the cooling-off period

  • Borrower complaints should be resolved by a nodal grievance redressal officer in 30 days

  • Only essential data should be collected from the borrower with explicit consent

  • All lending activities must be reported to Credit Information Companies (CICs)

  • Apart from these recommendations, there are a few more things that are under examination.

    Watch this space for more!

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